As mentioned in our previous Client Alert1, the Omnibus Bill numbered 6552 ("Omnibus Bill") has amended many laws and regulations including some articles of the Turkish Commercial Code ("TCC").
Accordingly, corporations, in order to transfer the representation authority from the Board of Directors ("BoD") to other members of the BoD who are not authorized to represent the corporation, should issue a by-law. Company's articles of association ("AoA") can delegate representation authority to one or more BoD members or a third party, entirely or in part.
In this respect, the Omnibus Bill, has introduced some changes in the TCC with respect to delegation of authorities of the BoD. Accordingly, in order to appoint a representative who shall be vested with the power to represent and bind the corporation; the by-law shall be registered with the trade registry and announced in the Trade Registry Gazette. Pursuant to the Omnibus Bill, in corporations; the BoD can appoint i) board members who are not authorized to represent the corporation, or ii) those under an employment contract; either as a representative with limited authority or as other merchant
assistants. However, the authorities must be expressly specified under the by-law which shall be registered with the trade registry announced in the Trade Registry Gazette. Also, for any such appointment a BoD resolution is necessary. It is worth noting that the foregoing amendments also apply to limited liability companies.
There was an ambiguity as to the implementation of this by-law. To that end, the Istanbul Trade Registry ("ITO") made an announcement clarifying the procedures to be followed in the implementation of these by-laws.
Pursuant to the announcement by ITO, the procedure shall be as follows:
- In order to issue the by-law required by the TCC with respect to delegation of representation and binding authority, the company must first ensure that its company agreement allows the delegation of board's authorities. Otherwise, the company agreement needs to be amended and the amendment shall be registered with the trade registry and announced in the Trade Registry Gazette.
- A notarized by-law setting out the framework for representation and binding authority matters shall be annexed to the BoD resolution (or general assembly resolution for limited liability companies) which then shall together be registered with the trade registry and announced in the Trade Registry Gazette.
Footnote
1 http://ersoybilgehan.com/DC/Files/23ccd69aabca46f098ebcf7ae8610ef2.pdf
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